Malta may call itself the “Blockchain Island” but it got some stiff competition on April 15 when French Finance Minister Bruno Le Maire proposed that its European Union partners “set up a single regulatory framework on crypto-assets inspired by the French experience,” Reuters reported.
The new French law provides a certification process for firms wanting to trade in digital assets or create new ones via initial coin offerings (ICO). It also establishes taxes and creates a process by which authorities would confirm who is behind an ICO or an exchange platform, inspect their business plans, and approve of their anti-money laundering compliance.
Speaking during the Paris Blockchain Week Summit, Le Maire added: “Our model is the right one.”
Yet, the French “model” still has a lot of details to be determined, with specific details of the regulations and requirements must still be set by regulators..
Speaking to the French magazine Capital, Le Maire revealed in an interview published on the same day that the government’s position is that the “development of the blockchain ecosystem is a priority for the government: it is a potential technology that can contribute to the modernization of our businesses and our economy.”
The ambitious strategy provides the French government with “all the assets to make France a country at the tip of the blockchain,” he added.
Le Maire said that the government created “an unprecedented and attractive legal framework,” for ICO issuers and digital asset service providers. He noted that, “[w]e also have a tax and accounting framework adapted to the specificities of crypto-assets.”
The Capital interviewer pushed Le Maire hard on the taxation issue, noting that while France has reduced the capital gains tax, in Germany they are exempt after a one-year holding period.
Le Maire responded by noting that not only had the government reduced that tax from 36.2% to 30%, it had changed the period in which it had to be reported from monthly to annually, and had exempted crypto-to-crypto transactions entirely.
“Taxation is not the only factor of attractiveness of a country for the crypto-active exchanges,” he argued. “Regulation is important and, even in the area of taxation, the clarity of the legal framework can be as important as the level of taxation.”
At the same time, Le Maire made clear that regulating cryptocurrencies, while important, was not the only goal of the law. The other part of the strategy, which will be in place by the end of the year, aims at nurturing blockchain firms and attracting entrepreneurs to set up shop in France, The goal, he said, is to bring the technology into “all sectors of the economy.”
That includes funding blockchain projects, and helping blockchain firms negotiate legal and regulatory requirements.
“We must not hinder innovation because these new technologies are likely to provide new services tomorrow, more efficient and more adapted to consumers,” Le Maire said. “But we must not be naive about the risks associated with the use of this complex technology.” That is particularly true when it comes to using cryptocurrencies for money laundering or financing illegal activities.
“Our goal is to build a legal framework of trust so that our companies can innovate while protecting the consumer,” he said.
Updated 09/12/19 to correct spelling of Bruno Le Maire.